Essay on Portfolio

2999 Words Nov 26th, 2015 12 Pages

Upasana Mitra and M. Kannadhasan wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Accordingly, he had put forth the following constraints:

He did not want to invest in individual stocks as he felt that doing so was too risky; instead, he preferred to invest in mutual funds, which had historically provided above-average returns.
In the previous year, his investment in a single balanced fund had not generated a satisfactory return; hence, he decided to diversify his portfolio of funds.
He also wanted the risk of the portfolio to not be more than 10 per cent per year. Nevertheless, with this limited risk, he wanted the portfolio to provide the best possible return.
Additionally, he didn’t want any short selling of securities.

Sharma had opted for an elective on Investments in his MBA course, and advising his uncle was his first opportunity to apply his academic knowledge to practice. As his uncle wanted to invest only in mutual funds, Sharma’s job was easier. He looked out for a list of mutual funds that had generated good returns over the past few years.

This document is authorized for use only by Huachen Sun in Capital Markets and Investments: Portfolio Construction taught by Watson, Harvard University from November 2015 to November

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Fund performance reports were widely available, but Sharma found he liked the comprehensive mutual fund information provided at a popular investment review website, The website provided the

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